IRS acting commissioner resigns in wake of scandal

May. 16, 2013 - 06:00AM
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Steven Miller, then-deputy IRS commissioner, testifies in 2010 in front of a House Oversight subcommittee. Miller has resigned as acting commissioner of the IRS as a scandal surrounding the agency grows. (Colin Kelly / Staff)

House Speaker John Boehner says he wants to know 'who is going to jail.' / Chip Somodevilla//Getty Images

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The top official at the Internal Revenue Service stepped down Wednesday amid a fast-building scandal over agency employees allegedly targeting for excessive scrutiny conservative groups who were seeking tax-exempt status.

Acting Commissioner Steven Miller told IRS employees in a letter the agency would benefit from new leadership.

“While I recognize that much work needs to be done to restore faith in the IRS, I don’t want anyone to lose sight of the fact that the IRS is comprised of incredibly dedicated and hard-working public servants,” Miller wrote.

President Obama said in a news briefing that he directed Treasury Secretary Jack Lew to accept Miller’s resignation, which takes effect in early June. Obama said Miller’s resignation is the first step in making sure nothing like this happened again.

The Justice Department and FBI have also launched a criminal investigation of the matter, Attorney General Eric Holder said Tuesday.

The alleged actions by IRS employees “were I think — as everyone can agree — if not criminal, they were certainly outrageous and unacceptable,” Holder said at a news conference.

In March 2010, IRS employees in Cincinnati began singling out groups seeking tax-exempt status, including groups with names including “Tea Party” or “Take Back the Country,” according to an IRS inspector general report released Tuesday.

Over the next two years, the employees asked about 296 groups for additional documentation to qualify for tax-exempt status. The requested information included résumés for all personnel, the hours worked per employee, how their pay was determined, and a list of every employee or board member past or present.

The IRS inspector general blamed the matter on “ineffective management.”

“The IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention,” the report said. The average wait time for an application flagged by the IRS was 574 days, while the longest was 1,138 days, according to the report.

The inspector general recommended the IRS better document reasons certain cases are flagged for review, develop a process to track applications and train employees before each election cycle to avoid future problems.

In a response to the report, the IRS said the flagging of particular groups was meant to help cope with the more than doubling of applications from 2008 to 2012 and numerous referrals from watchdog groups that tax-exempt organizations were engaged in extensive political activity. The IRS also acknowledged that its requests for more information in some applications were “overly broad.”

Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, called the agency’s actions appalling and said the additional information requested was far too onerous.

“IRS officials confirmed these flagged applications were essentially placed in a state of purgatory where they often languished without action for periods as long as two years,” Issa wrote in a letter sent Tuesday to Lois Lerner, the director of the exempt organizations division at the IRS responsible for approving tax-exempt organizations.

While no IRS employees have been disciplined for their actions, one employee has been promoted, Issa said. He also said Lerner provided false or misleading information in written responses last year when asked about the targeting of conservative groups by IRS officials.

NTEU President Colleen Kelley said in a letter to IRS employees that the report showed no indication of improper political motives or intentional wrongdoing by agency employees. She said a big part of the problem was a lack of training and procedures on dealing with tax-exempt groups.

“The IRS has stated that no one intentionally did anything wrong and I believe that to be the case,” Kelley said.

President Obama said in a news conference Monday that the IRS must be held accountable for its actions and must be fixed to prevent those problems in the future.

“If you’ve got the IRS operating in anything less than a neutral and nonpartisan way, then that is outrageous; it is contrary to our traditions,” Obama said.